10QSB 1 mweiq905.txt FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2005 Commission File Number: 0-9500 MOUNTAINS WEST EXPLORATION, INC. (Exact name of small business issuer as specified in its charter) New Mexico 85-0280415 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7609 Ralston Road, Arvada, Colorado 80002 -------------------------------- -------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: 303 422 8127 Indicate by check mark whether the issuer (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] The number of shares outstanding of the issuer's common stock, par value $.001 per share, at September 30, 2005, was 37,019,271 shares. MOUNTAINS WEST EXPLORATION, INC. FINANCIAL STATEMENTS SIX-MONTHS ENDED SEPTEMBER 30, 2005 (UNAUDITED) JASPERS + HALL, PC CERTIFIED PUBLIC ACCOUNTANTS -------------------------------------------------------------------------------- 9175 E. Kenyon Avenue, Suite 100 Denver, CO 80237 303-796-0099 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Mountains West Exploration, Inc. Denver, CO We have reviewed the accompanying balance sheet of Mountains West Exploration, Inc. as of September 30, 2005, and the related statement of operations for the three-month and nine-month period ended September 30, 2005, stockholders' equity and cash flows for the nine-months ended September 30, 2005. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). The review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, conditions exist which raise substantial doubt about the Company's ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its obligations and sustain its operation. Management's plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The financial statements for the year ended December 31, 2004 were audited by other accountants, whose report dated March 2, 2005, expressed an unqualified opinion on those statements. They have not performed any auditing procedures since that date. In our opinion, the information set forth in the accompanying balance sheet as of September 30, 2005 is fairly stated in all material respects in relation to the balance sheet from which it has been derived. Jaspers + Hall, PC Denver, CO October 11, 2005 /s/Jaspers + Hall, PC F-1
MOUNTAINS WEST EXPLORATION, INC. Balance Sheets (Unaudited) September 30, 2005 December 31, 2004 ASSETS: Current Assets: Cash $ - $ 30,637 -------------------- -------------------- Total current assets - 30,637 Fixed Assets: Office Equipment - 15,819 Lease & Well Equipment - 1,236 -------------------- -------------------- - 17,055 Less: Accumulated Depreciation - (14,685) -------------------- -------------------- Total fixed assets - 2,370 -------------------- -------------------- Other Assets: Undeveloped Property - 1,540 Well Leases - 17,768 Mineral Interest - 12,740 -------------------- -------------------- Total other assets - 32,048 TOTAL ASSETS $ - $ 65,055 ==================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts Payable $ - $ 34,861 Current Portion - Long-Term Debt - 18,744 -------------------- -------------------- Total Current Liabilities - 53,605 -------------------- -------------------- Long-Term Debt Long-Term Debt - 24,484 -------------------- -------------------- Total long-term debt - 24,484 -------------------- -------------------- Stockholders' Equity (Deficit) Common stock: authorized 50,000,000 shares, no par value 999,994 issued and outstanding at December 2004 and September 2005 Paid in Capital 1,579,786 1,579,786 Accumulated deficit (1,579,786) (1,592,820) -------------------- -------------------- Total Stockholder's Equity (Deficit) - (13,034) -------------------- -------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ - $ 65,055 ==================== ====================
See accountants' review report F-2
MOUNTAINS WEST EXPLORATION, INC. Statements of Operations (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2005 2004 2005 2004 --------------------- --------------------- --------------------- --------------- Revenues: Oil and Gas Income $ - $ 57,320 $ 111,520 $ 120,019 Cost of Goods Sold $ - $ - - 1,000 --------------------- --------------------- --------------------- --------------- Net Income - 57,320 111,520 119,019 Costs and Expenses: Operating Expenses - 29,381 33,431 52,456 Administration Expenses 3,466 7,550 30,637 24,643 --------------------- --------------------- --------------------- --------------- Total Operating Expenses 3,466 36,931 64,068 77,099 Net Income (Loss) from operations (3,466) 20,389 47,452 41,920 Other Expense Mineral Interest Transferred - - 12,740 - Mineral Lease Expired - - 19,308 - Write off of assets - - 2,370 - Interest Expense 1,156 - 3,646 --------------------- --------------------- --------------------- --------------- Total Other Expense - 1,156 34,418 3,646 --------------------- --------------------- --------------------- --------------- Net Income (Loss) $ (3,466) $ 19,233 $ 13,034 $ 38,274 ===================== ===================== ===================== =============== Per Share Information Weighted average number 999,994 740,385 999,994 740,385 of common share outstanding --------------------- --------------------- --------------------- --------------- Net income per common share * $ 0.03 $ 0.01 $ 0.05 * Less than $0.01
See accountants' review report. F-3
MOUNTAINS WEST EXPLORATION, INC. Statements of Cash Flows (Unaudited) Indirect Method Nine Months Ended September 30, 2005 2004 ---- ---- Cash Flows from Operating Activities Net Income (Loss) $ 13,034 $ 38,274 Adjustments to reconcile net loss to cash used by operating activities Depreciation - 324 Changes in operating assets and liabilities (Decrease) Increase in accounts payable & accruals (78,089) 2,500 (Increase) Decrease in Other Assets 34,418 (9,624) ------------------------------- Net Cash Used in Operating Activities (30,637) 31,474 Cash Flows from Financing Activities Payments on Notes Payable - (36,089) Proceeds from Notes Payable - 27,669 ------------------------------- Net Cash Used for Financing Activities (8,420) Net Decrease in Cash & Cash Equivalents (30,637) 23,054 Beginning Cash & Cash Equivalents 30,637 11,711 ------------------------------- Ending Cash & Cash Equivalents $ - $ 34,765 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest $ - $ 3,646 =========== =========== Cash paid for Income Taxes $ - $ - =========== ===========
See Accountants' Review Report F-4
MOUNTAINS WEST EXPLORATION, INC. Stockholders' Equity (Deficit) September 30, 2005 (Unaudited) COMMON STOCK Total Accumulated Stockholders' # of shares Amount Deficit Equity (Deficit) ----------- ------ ------- ---------------- Balance - December 31, 2001 740,385 $ 1,554,786 $(1,573,676) $ (18,890) Net Loss for Year - - (4,094) (4,094) ------------------ ------------------ ------------------ -------------- Balance - December 31, 2002 740,385 1,554,786 (1,577,770) (22,984) Net Loss for Year - - (16,483) (16,483) ------------------ ------------------ ------------------ -------------- Balance - December 31, 2003 740,385 1,554,786 (1,594,253) (39,467) Issuance of stock for cash 259,609 25,000 - 25,000 Net Profit for Year - - 1,433 1,433 ------------------ ------------------ ------------------ -------------- Balance - December 31, 2004 999,994 1,579,786 (1,592,820) (13,034) Net Income for Period - - 13,034 13,034 ------------------ ------------------ ------------------ -------------- Balance - September 30, 2005 999,994 $ 1,579,786 $(1,579,786) $ - ================== ================== ================== ============== See Accountants' Review Report
F-5 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements September 30, 2005 Note 1 - Presentation of Interim Information: In the opinion of the management of Mountains West Exploration, Inc., the accompanying unaudited financial statements include all normal adjustments considered necessary to present fairly the financial position as of September 30, 2005 and the results of operations for the nine-months ended September 30, 2005 and 2004, and cash flows for the nine months ended September 30, 2005 and 2004. Interim results are not necessarily indicative of results for a full year. The financial statements and notes are presented as permitted by Form 10-QSB, and do not contain certain information included in the Company's audited financial statements and notes for the fiscal year ended December 31, 2004. Note 2 - Going Concern: The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital or locate a merger candidate and ultimately achieve profitable operations. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. Management is seeking new capital to revitalize the Company. Note 3 - Capital Stock All shares of stock have been retroactively adjusted to show the results of the 1 for 50 reverse split as of April 14, 2005 F-6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Cautionary and Forward Looking Statements In addition to statements of historical fact, this Form 10-QSB contains forward-looking statements. The presentation of future aspects of Mountains West Exploration, Inc., ("Mountains West Exploration, Inc." the "Company" or "issuer") found in these statements is subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," or "could" or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause Mountains West Exploration, Inc. actual results to be materially different from any future results expressed or implied by Mountains West Exploration, Inc. in those statements. Important facts that could prevent Mountains West Exploration, Inc. from achieving any stated goals include, but are not limited to, the following: Some of these risks might include, but are not limited to, the following: (a) volatility or decline of the Company's stock price; (b) potential fluctuation in quarterly results; (c) failure of the Company to earn revenues or profits; (d) inadequate capital to continue or expand its busi- ness, inability to raise additional capital or financ -ing to implement its business plans; (e) failure to make sales; (f) rapid and significant changes in markets; (g) litigation with or legal claims and allegations by outside parties; (h) insufficient revenues to cover operating costs. There is no assurance that the Company will be profitable, and the Company may not be able to successfully develop, or manage any business, the Company may not be able to attract or retain qualified executives and personnel, and competition and government regulation may hinder the Company's business attempts. Further, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of warrants and stock options, and other risks inherent in business. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents the Company files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-QSB and Annual Report on Form 10-KSB filed by the Company in 2005 and any Current Reports on Form 8-K filed by the Company. Results of Operations for the Quarter Ended September 30, 2005 Compared to the Same Period in 2004. During the quarter ended September 30, 2005, there were no revenues compared to $57,320 in revenue for the same period in the prior year, which included, in 2004, a lawsuit settlement of $20,000 received. The company had operating expenses of $0 and $29,381 in the quarters in 2005 and 2004 respectively. The company incurred administrative expenses of $3,466 and $7,550 in 2005 and 2004 respectively in the quarter. Total expenses were $3,466 in the quarter in 2005 compared to $36,931 in the quarter in 2004. The net loss was ($3,466) the quarter in 2005 compared to a $19,233 profit in the quarter in 2004. The loss per share was nominal in the quarter in 2005 and there was a $.03 profit in 2004. Results of Operations for the Nine Months Ended September 30, 2005 Compared to Same Period in 2004. The company had revenues of $111,520 in the nine month period in 2005 compared to $120,019 in the period in 2004, from production sales from fractional working interests. 2004 revenue also included a $20,000 lawsuit settlement. The Company divested itself of fractional producing working interests in June 2005, when the production was unitized by the operator and the Company was notified of significant back charges against future revenues, as well as a significantly reduced ownership in the unit. The cost of goods sold was $0 and $1,000 in the nine month period in 2005 and 2004 respectively. The company experienced $33,431 in operating expense in the nine month period in 2005 compared to $52,456 in such expense in the same period in 2004. There was administrative expense incurred in the period of $30,637 in 2005 and $24,643 in 2004. The total operating expenses in the period were $64,068 in 2005 and $77,099 in 2004. The net profit for the period was $13,034 in 2005 compared to a loss of ($38,274) in 2004. The profit is due to revenue generation from gas production in the first six months, and was used to pay accrued debt. The profit per share was nominal in the period in 2005 and $.05 in 2004. Changes in Financial Condition Year to date the Company experienced a decrease in cash position to none at quarter end. The Company's total debt is none at the quarter end as a result of expense accruals. The Company's total liabilities are none. The company expects the trend will be of losses due to no revenues and that they will continue at an increasing rate, in the future. Liquidity and Capital Resources Year to date, the company had a decreased cash position, which is insufficient for any significant operations. The company had no cash no at quarter end. The company's only capital resources are its common stock which might be sold to raise capital. NEED FOR ADDITIONAL FINANCING The Company does not have capital sufficient to meet the Company's cash needs, to operate, and pay debt, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934. The Company will have to seek loans or equity placements to cover such cash needs. Lack of capital may be a sufficient impediment to prevent it from accomplishing the goal of expanding its operations. There is no assurance, that without funds it will ultimately allow company to carry out its business. The Company will need to raise additional funds to expand its business activities in the next twelve months. No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover its expenses as they may be incurred. Irrespective of whether the Company's cash assets prove to be inadequate to meet the Company's operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash. GOING CONCERN The Company's auditor has issued a "going concern" qualification as part of his opinion in the Audit Report. There is substantial doubt about the ability of the Company to continue as a "going concern." The Company has no business, limited capital, no debt minimal cash, no other liquid assets, and no capital commitments. Management hopes to seek and obtain funding, via loans or private placements of stock for operations, debt and to provide working capital. Management has plans to seek capital in the form of loans or stock private placements of approximately $250,000. ITEM 3. CONTROLS AND PROCEDURES a. Evaluation of Disclosure Controls and Procedures: Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required. b. Changes in Internal Control over Financial Reporting: There were no changes in the Company's internal control over financial reporting identified in connection with the Company evaluation of these controls as of the end of the period covered by this report that could have significantly affected those controls subsequent to the date of the evaluation referred to in the previous paragraph, including any correction action with regard to significant deficiencies and material weakness. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE ITEM 2. CHANGES IN SECURITIES NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER NONE ITEM 5. OTHER INFORMATION NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) 3.10 Amendment to Bylaws 32 906 Sarbanes-Oxley Certification 31 302 Sarbanes-Oxley Certification (b) Reports on Form 8-K. 8K filed 7/7/2005 8K filed 8/8/2005 SIGNATURES In accordance with section 13 to 15 (d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Denis Iler October 14, 2005 - -------------------------------------------------------- Denis Iler President, Chief Executive Officer